SIGMA-TAU INDUSTRIE FARMACEUTICHE RIUNITE v. LONZA

The opinion of the court was delivered by: Deborah Ann Robinson, United States Magistrate Judge.

MEMORANDUM ORDER

This is a declaratory judgment action in which plaintiffs seek
a determination that U.S. Patent No. 5,073,376 (the "L-carnitine
L-tartrate patent" or the "'376 patent") is invalid and not
infringed by virtue of a product which plaintiffs manufacture and
sell in Europe, but have not sold in the United States since
1996. During the course of discovery, plaintiffs took the
deposition of Stephen Blum, a co-inventor of U.S. Patent No.
5,030,657 (the "catfish patent")
and, at the time of the deposition, an employee of defendant.

Against this backdrop, the hearing on plaintiffs' motion to
compel commenced. During the course of five days, the undersigned
heard testimony from six witnesses — including Mr. Blum and Mr.
Lewen — and reviewed 84 exhibits, 58 of which were received into
evidence. At the conclusion of the hearing, counsel for the
parties met and conferred in accordance with the undersigned's
order. In the written report of their conference, plaintiffs
identified seven acts which they allege are relevant to their
allegations of fraud, all involving conduct by Mr. Lewen with
respect to Mr. Blum. See Stipulations of the Parties Regarding
Issues Before the Court as a Result of the Hearing Pertaining to
Plaintiffs' Motion to Compel Production of Documents
("Stipulations") at 3-4. Plaintiffs withdrew their allegations of
fraud against Mr. Francescani and Ms. Hayes, as well as the
various officers and employees of Lonza, Inc. and Lonza AG
against whom such allegations were initially made.*fn2
Stipulations at 4. Plaintiffs also withdrew their allegation that
Mr. Lewen committed an act of fraud by taking a position he knew
to be incorrect.*fn3 Stipulations at 5.

However, the parties were unable to agree as to the burden of
proof necessary to invoke the crime-fraud exception to the
attorney-client and work product privileges.*fn4 Plaintiffs
maintained that a prima facie showing of fraud was sufficient.
See Stipulations at 2. Defendant, on the other hand, maintained
that plaintiffs' burden is to prove fraud on the Court by clear
and convincing evidence. Stipulations at 3.

After the closing arguments of counsel, the undersigned
directed counsel to submit written memoranda on the single
"relevant act" as to which the evidence offered was subject to
varying interpretations: whether Mr. Lewen had knowledge that Mr.
Blum was testifying falsely when he was initially deposed.*fn5
Plaintiffs identified five deposition questions to which they
contend Mr. Blum gave answers Mr. Lewen knew to be false. See
Plaintiffs' Post-Hearing Submission at 4-10. Defendant maintained
that Mr. Blum's December 16, 1997 deposition testimony was
"basically accurate[,]" and that even if he lied at that time,
plaintiffs failed to prove by clear and convincing evidence that
Mr. Lewen knew the testimony was false. See Defendant's
Memorandum in Response to Plaintiffs' Post Hearing Submission at
2-3. The parties agree that in the context of Rule 3.3(a)(4) of
the D.C. Rules of Professional Conduct,*fn6 "false" means
"willfully stating
any material matter which the witness does not believe to be
true." Plaintiffs' Post-Hearing Submission at 3; Defendant's
Memorandum in Response to Plaintiffs' Post Hearing Submission at
4.

With respect to the alleged relevant acts regarding whether Mr.
Lewen knew Mr. Blum testified falsely at his December, 1997
deposition but failed to correct the record, assist Mr. Blum in
making corrections to the record or otherwise disclose the
perjury, the undersigned finds that plaintiffs have failed to
demonstrate that Mr. Blum offered any testimony at that
deposition which was false. See Stipulations at 3-4, Section
IV, Relevant Acts 3-7. Plaintiffs identify five deposition
responses as the "false testimony" which Mr. Blum allegedly
offered. See Plaintiffs' Post-Hearing Submission at 4-11.
However, the undersigned finds that with one exception, the
"corrected" answers are not responsive to the questions which
were asked. For example, Mr. Blum, at the December, 1997
deposition, said that he had not "interacted" with Willibald Kohl
"in the area of carnitine"; in his "corrected" answer, he
described a series of business meetings in which they both
participated. However, no "interaction" with Kohl "in the area of
carnitine" was demonstrated by Mr. Blum in his hearing testimony,
and Dr. Kohl directly contradicted such assertion. December 11,
1998 Tr. 163:11-19; 163:20-165:16; see Defendant's Memorandum
in Response to Plaintiffs' Post Hearing Submission at 7-10. The
undersigned therefore finds that the "corrected" answers to the
first four questions which plaintiffs identify are non-responsive
comments offered gratuitously by Mr. Blum, and not attempts to
correct testimony which he knew to be false.*fn8

With respect to Mr. Blum's single "corrected" answer which was
responsive to the question asked — whether he knew if Lonza, Inc.
sold carnitine tartrate — the undersigned cannot find that Mr.
Lewen knew that Mr. Blum was intentionally giving false
testimony. While Mr. Lewen testified at the hearing that he was
"surprised" by Mr. Blum's answer, such surprise does not, in and
of itself, constitute actual knowledge that the testimony is
false. Indeed, "[m]ere suspicion or inconsistent statements . . .
are insufficient to establish that the . . . testimony [is]
false." In re Grievance Committee of the United States District
Court, District of Connecticut, 847 F.2d 57, 63 (2d Cir. 1988)
(quoting Whiteside v. Scurr, 744 F.2d 1323, 1328 (8th Cir.
1984)); see Witherspoon v. United States, 557 A.2d 587, 592 n.
3 (D.C. 1989) (counsel must have a "firm factual basis" for
believing his client wishes to testify
falsely before taking measures to prevent the presentation of
perjured testimony).

Even assuming, arguendo, that Mr. Blum willfully offered
false testimony during his December, 1997 deposition, the
undersigned finds that plaintiffs have not shown that Mr. Lewen
knew that Mr. Blum's testimony was false. The requisite "quantum
of proof" which would apply to such a showing has not been
articulated by either the Supreme Court or this Circuit;*fn10
given its finding that Mr. Blum did not willfully offer false
testimony, the undersigned will not endeavor to do so here.
However, it is evident that the quantum of proof is more that the
initial showing which plaintiffs made as a part of their Motion
for Leave to Reopen Discovery to Redepose Stephen Blum and
Conduct Discovery of Matters Raised Therein. In re Sealed Case,
107 F.3d 46, 50 n. 6 (D.C.Cir. 1997) (distinguishing between
showing of a "factual basis adequate to support a good faith
belief by a reasonable person" warranting in camera review, and
"evidence to establish the claim that the crime-fraud exception
applies"); see United States v. Zolin, 491 U.S. 554, 563 n. 7,
109 S.Ct. 2619, 105 L.Ed.2d 469 (1989); In re General Motors
Corp., 153 F.3d 714, 716-717 (8th Cir. 1998); Haines v. Liggett
Group, Inc., 975 F.2d 81, 96 (3rd Cir. 1992); Laser Industries
Ltd. v. Reliant Technologies, Inc., 167 F.R.D. 417, 439-440
(N.D.Cal. 1996).*fn11

Measured by any standard higher than their initial showing,
plaintiffs have failed to prove that Mr. Lewen committed any
fraud on this Court. Instead, the undersigned finds that Mr.
Lewen never directed Mr. Blum to testify falsely; had no
knowledge that any testimony offered by Mr. Blum was false; and
had no reason to believe that Mr. Blum would testify falsely.

IV.

ORDERED that Plaintiffs' Motion to Compel Production of
Withheld Documents and Testimony Under the Crime-Fraud Exception
to the Attorney-Client Privilege and Work Product Immunity
Doctrine (Docket No. 117) be, and the same hereby is DENIED.

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